The trend toward mainstream,” sanitized” forms of Bitcoin that can be adopted by governments and banks is here to stay, which is not a bad thing. At the same time, it’s also important to preserve important aspects of the original vision of the Bitcoin Founders – a P2P currency that can’t be controlled by banks and governments, and supports untraceable private transactions.

In writing the paragraph above I have been tempted to replace “Bitcoin Founders” with just “Founders” and give this piece a wider and explicitly political angle, but then I preferred to stay on topic. However, most of the consideration below can be extended to a more general scope.

My article on “The Extropian Roots of Bitcoin” shows how Bitcoin has strong roots in the radical, futurist Extropian philosophy that started to bloom in the California of the 80s.

Bitcoin, first announced in Satoshi Nakamoto’s post “Bitcoin P2P e-cash paper” to the Cryptography mailing list, is the first working implementation of trustless P2P payments, where “trustless” means that the participants in a transaction don’t necessary have to trust each other or a trusted third party such as a government or a bank.

Nakamoto’s implementation – the Bitcoin network – in-principle allows for a pure P2P economy self-consistently managed by its participants without needing supervision by – and beyond the control of – the authorities.

Initially, the authorities dismissed Bitcoin as the harmless plaything of a handful of Libertarian geeks. Then, Bitcoin started to grow, was noticed by the media including sensationalist tabloids hungry for juicy bits of mega-scams and online drug markets, skyrocketed in price, and all of a sudden the authorities were forced to take notice – and of course they hated the idea.

Then, mainstream financial operators started to realize that Bitcoin technology can offer innovative solutions to real problems. In particular, Bitcoin technology permits faster and cheaper payments, permanently recorded in the tamper-proof public blockchain. In parallel, governments started to regulate the Bitcoin space with the stated goal of eliminating private transactions.

It’s important to bear in mind that Bitcoin isn’t anonymous. On the contrary, all transactions between Bitcoin addresses are permanently stored in the blockchain and open to analysis. Therefore, even though Bitcoin addresses aren’t explicitly associated to personal identities, sophisticated network analysis can permit de-anonymizing users and reporting them to the authorities if they violate applicable regulations.

Today, both bankers and bureaucrats are embracing Bitcoin as an innovative technology that can permit faster, cheaper, and better payments. At the same time, both regulators and law enforcers are crushing privacy.

Some financial institutions and government agencies are experimenting, conceptually or through preliminary development and pilot projects, with the idea of non-Bitcoin “permissioned” blockchains where only authorized operators can verify transactions (aka “mining”). But that seems naïve, because size matters in a network - the power and resilience of the Bitcoin network depends on its ability to recruit large number of miners with financial incentives.

Therefore, it seems likely that financial establishment and governments will claim ownership of the Bitcoin network and put strong anti-privacy measures in place. That will permit creating a fast, efficient, resilient, and cost-effective financial system, which is a good thing. At the same time, Bitcoin users will lose even the illusion of privacy.

It’s worth considering a parallel with the history of the Internet. First hailed as “Cyberspace, the new home of Mind” by EFF Co-Founder John Perry Barlow, the Internet is now much faster and more efficient, but used to deliver personalized spam and spy 24/7 on peaceful citizens. Of course, everything that we read and write online is exposed to the authorities. There are, however, strong privacy measures that tech-savvy users can take to protect their personal space.

The authorities are totally against online privacy, and justify their position with apparently sound boilerplate arguments that usually include terms like “terrorism” or “child pornography.” When discussing Bitcoin, they usually add “money laundering” as well.

Needless to say, all decent persons are firmly opposed to terrorism, child pornography, and large scale money laundering, and that applies to online privacy advocates as well. We realize that most often the authorities mean well – but it’s in the nature of power to seek more and more power in a runaway process. All the bad things just mentioned are very dangerous, but letting the authorities get away with their total control aspirations is also dangerous, and a very slippery slope....

It’s well known that safety and privacy, security and freedom, are always in direct conflict. But they are equally important aspects of a healthy society, and letting one take too much priority over the other is dangerous.

I think that’s what is happening in Western societies – we are giving safety and security too much priority over privacy and freedom. To counterbalance this trend, which I consider dangerous, I fully support online privacy, including private and untraceable Bitcoin transactions. Therefore, I look forward to privacy and anonymity preserving innovations in the Bitcoin space.

Giulio Prisco is a writer, technology expert, futurist and transhumanist. A former manager in European science and technology centers, he writes and speaks on a wide range of topics, including science, information technology, emerging technologies, virtual worlds, space exploration and future studies. He serves as President of the Italian Transhumanist Association.